Shinsegae Provides '300 Billion KRW' Cash and Real Estate Support to Shinsegae DF
KRW 295.9 Billion Cash and In-Kind Investment
Shinsegae DF Acquires New Shares
"To Secure Financial Soundness"
[Asia Economy Reporter Cha Min-young] Shinsegae is set to provide a total of 300 billion KRW in cash and in-kind support to its subsidiary Shinsegae DF, which operates duty-free shops.
On the 28th, Shinsegae announced through an intraday disclosure that it will invest 295.9 billion KRW in cash and in-kind contributions to its duty-free affiliate Shinsegae DF. The cash investment amounts to 100 billion KRW, and the in-kind contribution is 195.885 billion KRW.
The in-kind contribution targets the 8th to 12th floors and the 16th to 17th floors of the main building of Shinsegae Department Store, where the Shinsegae Duty-Free Myeongdong branch is currently located. Shinsegae will transfer the relevant real estate to Shinsegae Duty-Free and acquire new shares of Shinsegae Duty-Free equivalent to the amount. The cash investment will be used as operating funds for the duty-free business.
As Shinsegae acquires 10,455,299 newly issued shares of Shinsegae DF, the total number of shares held will increase to 20,555,299 shares. However, the shareholding ratio remains the same at 100% due to the rights offering. The issue price of the new shares is 28,300 KRW, and the scheduled acquisition date is the 12th of next month.
Since the end of January this year, the duty-free industry has faced difficulties as the novel coronavirus (COVID-19) pandemic spread globally. Total duty-free sales in February and March this year were 1.1026 trillion KRW and 1.0873 trillion KRW, respectively, down 45.5% and 46.3% compared to January (2.0248 trillion KRW). This is interpreted as companies implementing measures to enhance operational stability.
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A Shinsegae official explained that the purpose of this stock acquisition is "to secure financial soundness for the long-term growth of the duty-free business."
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